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If we started in 1960 and we said that as productivity goes up, that is as workers are producing more, then the minimum wage is going to go up the same. And if that were the case then the minimum wage today would be about $22 an hour.

Here are a couple of graphs that back up that claim:

You see the gap between productivity and the real minimum wage in the bottom graph? Who reaps the benefits of that gap? And as for the top graph, Elizabeth Warren wants to know:

…with a minimum wage of $7.25 an hour, what happened to the other $14.75? It sure didn’t go to the worker.

The what? The worker? Someone in Congress is worried about the worker? Yes, it’s true. In fact, there are more than a few of them and guess what? They’re all liberal, I said, liberal, Democrats! Imagine that. Have you ever heard a conservative Republican wonder out loud why workers aren’t getting more of the benefits of the ginormous increase in productivity? Huh? Of course you haven’t.

In any case, Warren made her remarks last week during a Senate subcommittee hearing and they were directed to Dr. Arindrajit Dub, a professor from UMass who happens to know something about the minimum wage because, uh, he studied it. As HuffPo notes:

Dube went on to note that if minimum wage incomes had grown over that period at the same pace as it had for the top 1 percent of income earners, the minimum wage would actually be closer to $33 an hour than the current $7.25.

Of course, even liberal Democrats aren’t quite bold enough to ask for the whole enchilada, only this:

Warren went on to argue that raising the federal minimum wage to over $10 an hour in incremental steps over the next two years — a cause championed by President Barack Obama in his State of the Union address and since taken up in the Senate — would not be as damaging for businesses as some critics have argued.

Contrary to prevailing myths about who would benefit from a proposed increase in the minimum wage, 88 percent of the 28 million workers affected are not teenagers. As the Economic Policy Institute has shown, the majority are full-time workers, and on average they earn about half of their families’ income. And 28 percent of the nation’s 76 million children would have a parent who would benefit from the raise.

Another minimum wage myth that needs a dose of reality is this one:

And raising the minimum wage doesn’t only cut into profits, it also increases demand in the economy by moving income to workers who spend more than those who receive profit. The Economic Policy Institute estimated that the proposed increase in the minimum wage would actually increase employment.

And dispelling the largest myth of all:

Although it is theoretically possible to raise minimum wages enough to cause employers to hire fewer workers, there is hardly any indication from economic research that the proposed increase in the minimum wage would have this effect.

So, under the Warren proposal, almost 25 million folks, many of them with kids, would get a raise which would in turn benefit the entire economy and would not increase unemployment in the slightest.

Who could be against that?

Oh, I forgot.

The mainstream press is too busy worrying about reforming the Republican Party and the Republican Party is too busy worrying about keeping tax rates low on rich people.

Only liberal Democrats have time to celebrate and promote the interests of the American worker.

2 Comments

The problem as I see it is that the nature of labor has changed markedly in the last half-century. When I was a high-school kid, a body was pretty much a body. While there have always been some quality minimums, they were pretty low at that time. I worked as a combination stock-boy, janitor and clerk, and I’m guessing that almost all of my high-school classmates could have done the same job adequately, assuming adequate motivation. The hours were long on Saturdays – 12 hours, but the minimum requirements were basic literacy and ordinary physical stamina.

Much has changed today. Of course the fast food industry is similar to my description still, but industry has automated, with sophisticated software and robotic machines doing much of the grunt work. Even house-construction now benefits, using versatile mechanical-hydraulic front-loaders to dig ditches, haul dirt, and drill holes. Carpenters have pneumatic nail guns that run rings around the old way. Factories are notable for missing people because few are needed anymore, and the ones who are needed have to be well-educated and well-trained. There’s the rub. We are having to import foreign workers for such jobs because our educational system has failed to meet the need.

Productivity is both a blessing and a curse. There will always be a need, I think, for human services – the food industry in particular, waiting table, cooking and stocking, but there are too many people chasing too few of those jobs – hence the low pay. Healthcare jobs are better and likely to grow as the population ages, but again, training is the issue.

It would be interesting if some smart economist could do a thought experiment and tell us what would be the effect of eliminating the minimum wage altogether. Would it be a return to the days of the Robber Barons or the times of Charles Dickens, with people in poor houses and dying of starvation? Well, no, that wouldn’t happen if we still had food stamps and the like, although some would like to eliminate those too. But it isn’t healthy for a person’s self-respect to abandon the work-ethic. People need to feel independent and useful, and that means work. I’m in favor of maintaining a minimum wage, but I think it’s unrealistic to force it to levels similar to what is earned by the trained and educated. If the work force loses its competitiveness it will lose its quality and that’s bad for society.

What’s the answer? I think it’s two-fold. Better education and reformed immigration policies. Why the latter? Because even with the minimum wage at $7.25 we can’t get people to harvest hand-processed crops and similar muscle-intensive jobs.

I don’t advocate for anything other than pushing the wage up some and then tying it to inflation, which has eroded its value.

Our education system is rooted in another age, and I am convinced more and more that we need a complete overhaul. I just don’t think the right place to begin is by attacking teachers’ unions or teachers. The structure of our system is not fit for the 21st century for most of the reasons you mention, and the teachers are as trapped as the kids. The curriculum needs a revolution, perhaps along the lines we have discussed before: some kind of two-track system in high school (for me, it would have to be totally voluntary) in which trade skills, etc., were taught to those who didn’t want to read Plato or pursue life as a doctor, lawyer, teacher, or scientist, etc. I, of course, would teach them the value of trade unions and how to organize them.